Chipotle: Announces First Quarter 2024 Results

Newport Beach / CA. (cmg) Chipotle Mexican Grill Inc. reported financial results for its first quarter ended March 31, 2024. First quarter highlights, year over year:

• Total revenue increased 14.1 percent to USD 2.7 billion
• Comparable restaurant sales increased 7.0 percent
• Operating margin was 16.3 percent, an increase from 15.5 percent
• Restaurant level operating margin was 27.5 percent, an increase of 190 basis points
• Diluted earnings per share was USD 13.01, a 23.9 percent increase from USD 10.50. Adjusted diluted earnings per share, which excluded a USD 0.36 after-tax impact from an increase in legal reserves, was USD 13.37, a 27.3 percent increase from USD 10.50.
• Opened 47 new restaurants with 43 locations including a Chipotlane

«We had another outstanding quarter driven by our improvement in throughput and successful marketing initiatives, including Braised Beef Barbacoa and Chicken Al Pastor, which drove strong sales and transactions. The results we are seeing from our focus on developing exceptional people, preparing delicious food and fast throughput gives me confidence that we can achieve our long-term target of more than doubling our business in North America and expanding internationally,» said Brian Niccol, Chairman and CEO, Chipotle.

First Quarter 2024 Financial Results

Total revenue in the first quarter was USD 2.7 billion, an increase of 14.1 percent compared to the first quarter of 2023. The increase in total revenue was driven by new restaurant openings and a 7.0 percent increase in comparable restaurant sales due to higher transactions of 5.4 percent and a 1.6 percent increase in average check. Digital sales represented 36.5 percent of total food and beverage revenue.

We opened 47 new restaurants during the first quarter with 43 locations including a Chipotlane. These formats continue to perform well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns.

Food, beverage and packaging costs in the first quarter were 28.8 percent of total revenue, a decrease of about 40 basis points compared to the first quarter of 2023. The decrease was primarily due to menu price increases from October 2023, partially offset by inflation across several ingredient costs, primarily beef and produce, and a protein mix headwind from the successful Braised Beef Barbacoa marketing initiative.

Restaurant level operating margin in the first quarter was 27.5 percent compared to 25.6 percent in the first quarter of 2023. The improvement was primarily driven by the benefit of sales leverage, partially offset by wage and ingredient inflation.

General and administrative expenses for the first quarter were USD 204.6 million on a GAAP basis, or USD 191.4 million on a non-GAAP basis, excluding a USD 13.3 million increase in legal reserves. GAAP and non-GAAP general and administrative expenses for the first quarter also include USD 125.8 million of underlying general and administrative expenses, USD 34.3 million of non-cash stock compensation, USD 21.0 million for our biennial All Managers Conference held in the first quarter of 2024, and USD 9.9 million of payroll taxes on equity vesting and exercises and higher performance-based accruals.

The effective income tax rate for the first quarter was 22.0 percent compared to 22.5 percent in the first quarter of 2023. The decrease in the effective income tax rate was primarily due to an increase in tax benefits from option exercises and equity vesting.

Net income for the first quarter was USD 359.3 million, or USD 13.01 per diluted share, compared to USD 291.6 million, or USD 10.50 per diluted share in the first quarter of 2023. In the first quarter of 2024, excluding the USD 0.36 after-tax impact from an increase in legal reserves, adjusted net income was USD 369.3 million and adjusted diluted earnings per share was USD 13.37.

During the first quarter we repurchased USD 25.0 million of stock at an average price per share of USD 2,320. Due to the timing of our announcement of a 50 for 1 stock split, we were unable to repurchase our shares for most of the quarter. We plan to resume opportunistically repurchasing our shares when the trading window opens on April 26, 2024. As of March 31, 2024, USD 399.1 million remained available under share repurchase authorizations from our Board of Directors. The repurchase authorization may be modified, suspended, or discontinued at any time.

More information will be available in our Quarterly Report on Form 10-Q, which will be filed with the SEC by the end of April.

Outlook

For 2024, management is anticipating the following:

• Full year comparable restaurant sales growth in the mid to high-single digit range
• 285 to 315 new restaurant openings with over 80 percent having a Chipotlane
• An estimated underlying effective full year tax rate between 25 and 27 percent before discrete items

Definitions

The following definitions apply to these terms as used throughout this release:

• Comparable restaurant sales, or sales comps, and comparable restaurant transactions, represent the change in period-over-period total revenue or transactions for restaurants in operation for at least 13 full calendar months.
• Average restaurant sales refer to the average trailing 12-month food and beverage revenue for restaurants in operation for at least 12 full calendar months.
• Restaurant level operating margin represents total revenue less direct restaurant operating costs, expressed as a percent of total revenue.
• Digital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators. Digital sales include revenue deferrals associated with Chipotle Rewards.

About: Chipotle Mexican Grill Inc. is cultivating a better world by serving responsibly sourced, classically-cooked, real food with wholesome ingredients without artificial colors, flavors or preservatives. Chipotle had nearly 3,500 restaurants as of March 31, 2024, in the United States, Canada, the United Kingdom, France and Germany and is the only restaurant company of its size that owns and operates all its restaurants in North America and Europe. Chipotle is ranked on the Fortune 500 and is recognized on Fortune’s Most Admired Companies 2024 list and Time Magazine’s Most Influential Companies. With over 120,000 employees passionate about providing a great guest experience, Chipotle is a longtime leader and innovator in the food industry. Chipotle is committed to making its food more accessible to everyone while continuing to be a brand with a demonstrated purpose as it leads the way in digital, technology and sustainable business practices.